London
“Time TV”
 — 

CEO Tim Prepare dinner made the pledge in a gathering with Vietnamese Prime Minister Pham Minh Chinh in Hanoi Tuesday, in keeping with a assertion by Vietnam’s authorities.

Apple (AAPL) has already spent virtually $16 billion by means of its provide chain within the nation since 2019, the federal government quoted Prepare dinner as saying. And the corporate has created greater than 200,000 jobs in Vietnam, it added.

In response to the assertion, Prepare dinner mentioned Apple “stands prepared … to boost cooperation and funding actions” within the Southeast Asian nation.

His go to highlights Vietnam’s rising significance to international firms on the lookout for options to China as commerce tensions between Beijing and the West have escalated lately.

Vietnam has been a “main beneficiary” of strikes by multinational firms to diversify their manufacturing hubs — a technique often called “China plus one” — says Thuy Anh Nguyen, a strategist at Dragon Capital, an area fund administration agency that invests solely in Vietnamese firms.

Nguyen, whose agency manages $6 billion in property, informed “Time TV” that labor prices in Vietnam’s manufacturing sector are about half these in neighboring China.

That has helped Vietnam go from producing largely “low-value merchandise” like textiles to extra tech merchandise like iPhones and iPads, she mentioned. “These are higher-value objects. That’s how we transfer up the worth chain.”

Vietnam pulled in additional than $4.29 billion in overseas direct funding in the course of the first two months of the yr, up virtually 39% from the identical interval in 2023, in accordance to the nation’s Ministry of Planning and Funding. Many of the new funding went into the processing and manufacturing sector.

A ‘excellent touchdown spot’

In recent times, fast-growing Asian economies like Vietnam and India have emerged as different places for producers as ties between Beijing and the West have frayed.

Vietnam is “the proper touchdown spot for tech firms to diversify exterior China,” in keeping with Dan Ives, a senior fairness analyst at Wedbush Securities, who pointed to the excessive variety of skilled engineers within the nation as one issue.

“We’re not simply speaking about (manufacturing of) low-cost electronics,” he informed “Time TV”. “We’re speaking larger up the worth chain… That was not even on the radar (of overseas firms) two years in the past.”

As soon as enemies in struggle, the USA and Vietnam have grown more and more shut — the worth of US imports of Vietnamese items soared greater than 360% within the decade to end-2023 to high $144 billion, in keeping with US authorities information.

In September, the 2 international locations formally upgraded their diplomatic ties to a “complete strategic partnership,” a symbolic but extremely necessary transfer that positions Vietnam as a vacation spot for extra US funding, together with for essential applied sciences like semiconductor chips.

Intel (INTC) has additionally taken word of Vietnam’s rise. In 2021, the corporate dedicated $1.5 billion to a sprawling campus simply exterior Ho Chi Minh Metropolis, which it says shall be its largest single meeting and check facility on the planet.

On the identical time, relations between the USA and China have deteriorated. A commerce struggle between the 2 international locations, which started in 2018 when Washington slapped tariffs on many Chinese language imports, ratcheted up final yr as either side launched tit-for-tat chipmaking export controls.

In the course of the pandemic, in the meantime, China’s strict zero-Covid coverage scrambled international provide chains, demonstrating the dangers of concentrating manufacturing in a single location.

Notably, the world’s largest iPhone manufacturing unit, positioned in central China and owned by Taiwanese manufacturing agency Foxconn, was compelled to quickly shut down in 2022 after employees revolted over fears of the unfold of coronavirus.

Vietnam has one other benefit, says Nguyen: A booming, educated, and youthful inhabitants. That’s an enormous draw for overseas tech firms trying to rent employees for his or her factories, and discover customers for his or her merchandise.

“Vietnam has a inhabitants of 100 million folks. If it was in Europe, it will be the largest nation,” she mentioned, additionally noting that smartphone adoption in Vietnam was quickly growing.

The Worldwide Financial Fund expects Vietnam’s economic system to progress 5.8% this yr, a lot sooner than the anticipated international common of three.2%. For 2025, the fund forecasts progress of 6.5% in Vietnam. That’s not far off India’s tempo of enlargement.

Nonetheless, Vietnam represents a much smaller market than India, which has additionally been wooing massive overseas firms, together with Tesla (TSLA), to arrange factories within the nation.

For now, Vietnam’s attractiveness to overseas corporations is “extra round provide than demand,” says Ives at Wedbush Securities, whereas, for India, it encompasses each.

Juliana Liu contributed reporting.